Electronic Submission of Lessee Financial Statements Postponed

Pursuant to HUD's "Submission and Review Requirements & REMS Critical Data Fields for Annual Financial Statements" Handbook, the lessee's regulatory agreement, unless amended, typically did not require the lessee to submit financial statements covering the operations of the project, unless there was a default under the lease agreement. On January 10, 1997, HUD published Notice 97-1, which required HUD to amend the lessee's regulatory agreements on new leased nursing homes adding a provision to require the lessee to submit annual financial statements covering the projects operations.

In January, 2008 the Office of Asset Management of the U.S. Department of Housing and Urban Development (HUD) issued a memorandum concerning financial statements for leased nursing homes. The memorandum states that due to technical problems, lessees' financial statements will NOT be required to be submitted electronically for the December 31, 2007 fiscal year-end. Lessees with a regulatory requirement to submit financial statements must submit them in hard copy format to their local Multifamily Program Center, which is the same as in previous years. Financial statements for lessors must continue to be submitted electronically.

HUD continues working towards requiring electronic submission of annual financial statements of lessees, however for 2007 this requirement has been postponed at least until next year. There continues to be many lease transactions involving HUD financed nursing facilities.  Therefore, as you are considering entering into these lease transactions make sure you are aware of the current and the potential future HUD financial statement requirements either as the lessee or lessor. HUD's financial statement requirement should be included in the lease documents between the lessor and lessee as to the lessee's responsibility under current and future HUD regulations.  

Deadline Date Reminder

Since 2008 is a leap year, the deadline for electronic submission to Real Estate Assessment Center will be on March 30, 2008, and not March 31st.